Atlas Energy Resources LLC, Pittsburgh, plans to drill more than 100 horizontal wells to Devonian New Albany shale in southwestern Indiana by the end of 2009.
The company has acquired 114,000 net acres and has taken a farmout on 78,000 net acres from Aurora Oil & Gas Corp., Traverse City, Mich. The combined transactions give Atlas rights to 284,000 largely contiguous gross acres in the Illinois basin, mainly in Sullivan, Knox, Greene, Owen, Clay, and Lawrence counties, Indiana.
Drilling is to start in 2008, with Atlas Energy using capital from its syndicated oil and gas investment programs. The total acreage contains about 800 horizontal drilling locations.
The farmout requires that Atlas Energy drill at least 20 wells/year and grants Aurora a right to participate for 25%. Aurora will receive a well site fee for and overriding royalty interest in each well.
The acreage is in the northern “biogenic” part of the New Albany shale play, where several operators have drilled more than 40 successful horizontal wells, said Atlas Energy.
“We have been studying the New Albany shale for over 2 years and believe the predictable and statistical nature of its development is a perfect fit for our investment programs,” said Atlas Energy president and chief operating officer Richard D. Weber.
Overseeing Atlas Energy’s New Albany shale development will be the company’s Antrim Shale operating team, led by Dick Redmond, president of Atlas Energy Michigan LLC. The New Albany shale has many similarities to Michigan’s biogenic Antrim shale, in which Atlas Energy is the largest and one of the lowest cost operators.
Atlas Energy noted that New Albany is a blanket formation 100-200 ft thick and 500-3,000 ft deep. Natural fracture patterns are low-angle in the Antrim shale and vertical in the New Albany.
Atlas Energy reviewed more than 30 successful horizontal completions in and near its acreage and observed an average estimated ultimate recovery of 1.3 bcf/well. Horizontal New Albany wells with 4,000-5,000-ft laterals can be drilled and completed for $1.3 million.
Aurora Oil & Gas, through predecessors, has been working in the New Albany play since 1994. Operator and majority owner until now of its 121,702-gross-acre Wabash project in Clay, Greene, Owen, and Sullivan counties, it has drilled 13 wells. All may be considered productive, but all are shut-in awaiting connection to pipeline and processing facilities.